This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
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Capital gains tax (CGT) is the tax you pay on any capital gain you make and include in your annual income tax return.
You may make a capital gain (or profit) as a result of a CGT event, for example, when you sell an asset for more than you paid for it. You can also make a capital gain if a managed fund or other trust distributes a capital gain to you.
We may have used some terms that are not familiar to you. These words are described in the Explanation of terms in this guide.
While we have sometimes used the word 'bought' rather than 'acquired', you may have acquired an asset without paying for it (for example, as a gift or through an inheritance). Similarly, we refer to 'selling' an asset when you may have 'disposed' of it in some other way (for example, by giving it away or transferring it to someone else). For the purposes of this guide, all of these 'acquisitions' and 'disposals' are CGT events.
Generally, you can disregard any capital gain or capital loss you make on an asset you acquired before 20 September 1985 (pre-CGT). Also, any capital gain or capital loss made on a CGT event involving plant after 11.45am on 21 September 1999 is disregarded, although other income tax provisions apply.
If you are an individual, you show the total of your current year capital gains at label H item 17 in your tax return.
If you are completing your entity's tax return, capital gains are shown in the following items:
- Company tax return 2001 (item 6)
- Trust tax return 2001 (item 17), or
- Fund income tax and regulatory return 2001 (item 9).
Capital gains tax affects your income tax if you have made a net capital gain this income year. Your net capital gain is:
your total capital gains for the year
your total capital losses (including any capital losses from previous years)
any CGT discount and CGT small business concessions to which you are entitled.
You show your net capital gain at label A in the capital gains question in your tax return.
To work out whether you have to pay capital gains tax, you need to know:
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- whether a CGT event has happened (this is the question asked at label G)
- the time of the CGT event
- how to calculate the capital gain or capital loss
- whether there is any exemption or roll-over that allows you to reduce or disregard the capital gain or capital loss
- how to apply any capital losses
- whether the CGT discount applies, and
- whether you are entitled to any of the CGT concessions for small business.